Surviving a Hedge Fund Operational Due Diligence

With increased emphasis on operational risk and internal controls, hedge fund investors are focusing on their due diligence processes – both prior to an initial investment and on an ongoing basis.

Taught by a former hedge fund COO, this one-day seminar is designed to help hedge funds better navigate a due diligence conducted by a prospective or current investor.  It is tailored toward senior hedge fund management professionals, including Chief Investment Officers, portfolio managers, salespeople, COOs, CFOs, CTOs, CCOs, compliance staff, fund accounting and operations managers, looking to better understand the intricacies of the operational due diligence process and what investment and operational components and risks investors will evaluate.

At the end of this course, participants will come away with best practices and practical recommendations for identifying risks within their own organization and pro-actively preparing for an external due diligence review. 

The course covers the following topic areas:

·         The importance and purpose of a due diligence review and the investor’s overall meeting objectives

·         General recommendations – how to prepare yourself and your team

·         Firm overview – history, ownership, organizational structure, AUM and staff

·         Investment philosophy and decision-making process  - knowing the topics that will be covered and learning how to explain your current investment process effectively, concisely and with an awareness of risk

·         Risk management – an overview of how investors look at risk management and how you can prepare

·         Overview of investors – what your current and prospective investors want to know about your current investors – and why

·         Fund structure – how to communicate details on your fund structure without simply handing over the PPM

·         Subscription/redemption process – pro-actively identify the risks in these processes and learn how to address them

·         Key vendors/service providers – how to manage your vendor selection and monitoring processes

·         Primary counterparties – counterparty selection, monitoring and best execution

·         Legal/compliance oversight – investment guideline compliance, trade allocation policies, personal trading, firm trading for its own account, code of ethics, compliance manual, records retention, conflicts of interest and regulatory oversight

·         Technology overview – infrastructure, applications, systems implementation, data security, physical security, disaster recovery

·         Operations – life cycle of a trade, trade errors, margin / collateral movement, cash movement

·         Pricing – frequency, sources, reviews, estimates, timing, subjective pricing

·         Fund accounting – NAV calculations (estimated and final), fee calculations, investor reporting, transparency, timeliness of NAVs, audited financials, K-1s, tax estimates

·         Performance measurement – frequency, data sources, calculation methods, volatility, GIPS®, reporting (including database updates), after-tax returns

Agenda:

* This seminar includes a continental breakfast and two refreshment breaks. Lunch is not included. There is a one hour break provided at 12:30. A sampling of local restaurants can be found on the "Event Location" page.